Mr Farage’s party currently has 13 seats in the European Parliament after winning around 16.5 per cent of the vote in 2009, pushing Labour into third place. Pollsters believe Ukip would need to secure about 27 per cent in the elections expected on May 22 to overtake the Tories as the largest UK party in the European Parliament.

Such an outcome would send shock-waves through Westminster and especially through the Conservative Party, which has seen many activists defect to Ukip in recent months.

David Cameron’s promise of a referendum on a renegotiated EU settlement by 2017 has not stemmed the flow of support to Ukip, with many Tory Euro-sceptics unpersuaded that he can deliver a new deal for Britain.

A key development will be the removal of barriers to Romanian and Bulgarian citizens working in Britain from Jan 1. Mr Sykes, who spent an estimated £6 million campaigning against the UK joining the single currency with Sir James Goldsmith in the Nineties, has commissioned a poll showing that 74 per cent of the public are opposed to the free movement of labour from the two countries. Just 15 per cent said they were in favour.

“As a nation state, Britain is drinking in the last chance saloon,” said Mr Sykes, who in a 2010 Rich List was estimated to be worth £650 million.

“Our failure to exert any control over our border with the 27 other members of the EU means that we are on the brink of abolishing ourselves as an independent country and consigning 1,000 years of nationhood to the dustbin of history.”

He added: “I have nothing against people from Romania and Bulgaria, but given the four million immigrants we have absorbed since 1997, and given the prospect that the end of transitional controls on two of the poorest countries on the continent will trigger another wave of mass immigration … you have to drawn the line somewhere.”

Mr Sykes said he was not a Ukip member and had no party political motivation behind his decision to provide the party with funds.

“I am in this to give people a say about their future,” he said.

“We are going to roll some guns out … every person in Britain will get to know a lot more from our campaign than they have ever got to know from all the other campaigns put together.”

Mr Farage said: “I have worked with Paul and been close to him over many years and I have never seen him so determined as he is today. I have said for a long time now that I wanted to cause an earthquake on May 22 next year, and with people like Paul Sykes working with us that makes it more likely.”

Nick Clegg, the Deputy Prime Minister, defended freedom of movement within the EU. “Hundreds of thousands of British people benefit by going to live and work abroad elsewhere in the European Union. This is a two-way thing,” he told the BBC.

He said he understood concerns about the lifting of restrictions on Romanians and Bulgarians, but insisted that there would be no repeat of 2004, when Britain opened its borders to Poles and other eastern Europeans, prompting hundreds of thousands to come to the UK.